It's house prices
The RP Data-Rismark index suggests prices climbed 1.6 per cent in the three months to March after falling 3 per cent throughout 2008.
Melbourne prices increased more sharply than most, jumping an average of 2.4 per cent in the three months to March, with the typical unit priced at $362,200 and the typical house priced at $451,000.
Rismark's figures give a better indication of price movements than other measures as they are adjusted for changes in the composition of the properties that are sold each month. The March figures are preliminary and will later be adjusted to cover 100 per cent of sales.
"This isn't primarily the result of the top-up in the First Home Owners' Grant," said Macquarie Bank economist Rory Robertson...
"It's because interest rates have fallen into the 5 to 6 per cent range. "The vast majority of homebuyers with variable-rate mortgages are suddenly enjoying rates lower than they ever had contemplated."
"As well six years worth of Reserve Bank rate hikes have ensured heaps of pent-up demand. When the Bank suddenly cut rates it dramatically tilted the buy-rent decision towards buying, as the cost of servicing a mortgage dropped sharply relative to the cost of renting. Most of today’s first-home buyers probably would have been getting busy even without the extra $7,000 on offer from Canberra."
Rismark Managing Director Christopher Joye agreed.
"While the boost to the grant has certainly helped, the hyperbole ignores the fact that 70 to75 per cent of all buyers in the market are not first timers."
Mr Joye said an increasing number of buyers were investors, "positively gearing" in order to make rather from renting rather than to make tax losses as in the apst.
"Assuming an 80 per cent loan with a discounted 5.3 per cent mortgage rate, gross rents now cover all mortgage repayment costs for units in every state of Australia," he said.
In every city but Brisbane unit prices have showed greater strength than house prices in the past three months, most likely because of their relative cheapness.
Unit prices in Darwin soared an extraordinary 6.4 per cent in the first three months of this year, with Melbourne and Sydney jumping 2.8 and 2.4 per cent.
Unit prices rose in Adelaide while house prices fell and fell less steeply than house prices in Perth.
Prime Minister Kevin Rudd indicated last week that the $7,000 to $14,000 First Home Owners Boost might not be renewed when it expires in June saying that "all good things must come to an end." Treasurer Wayne Swan is expected to announce its fate in Tuesday week's Budget.
Housing was also the only bright spot in separately released Reserve Bank credit figures. Lending for housing climbed a further 0.6 per cent in February while personal and business borrowing slid a further 0.3 and 0.6 per cent.
RP Data dwelling prices March 2009
And here are two graphs from Rory: